Inventory Management

Operations Research and Management

A report on

Submitted By:Dhruva Jyoti (08DM011)

This is what inventory management is all about. It will eliminate a number of the problems associated with capital shortages and will also provide capital to permit expansion of operations for increased sales and profit. you have got to be ready with the goods. the most effective and profitable way is to sell it to . · Maintaining clear. · Inventory replenishment in anticipation of customer demand. the overstock should be reduced as promptly as possible. Control of this investment is vital. correct. while providing adequate safety stocks. Inventory Investment Control Inventory investment control is accomplished in two ways: · Prompt elimination of overstocked items. · Reducing excessive inventories promptly. "I'm sorry we're out of that size. and current records. When the customer spends. May we order it for you?" Even though the shirts are selling briskly. · Purchasing the proper assortment of goods in quantities that will maintain inventory levels consistent with business requirements. you will lose customers if you don't have an item in stock.Inventory Management Introduction You are in trouble if you have to keep telling customers. Whenever a particular item is overstocked. Naturally. L ite ra ture R e v ie w Inventory Management Inventory management can be briefly described as: · Acquiring an adequate supply and assortment of merchandise from which customers can buy. the single largest asset is inventory. · Providing safety stocks to meet unexpected demand or delays in inventory replenishment. In many retail and wholesale operations. so that the dollars realized from clearing overstocks can be invested in merchandise with a greater market potential.

you make space available for inventory that can be sold at a profit. even at a discount. Frequently. or months' sales. Perhaps you can even arrange wholesale sales to a competitor. Determining purchasing requirements involves answering two questions: · What to buy? · How much to buy? Both questions can be answered by establishing an inventory target for any item you carry expressed as so many days'. there are other possibilities. Planning your purchases will also help you avoid shortages that can only be filled through forfeiture of discounts or absorption of premium shipping charges. you reduce a misleading overstatement of inventory on your company's books. Excessive consumer goods inventories are often sold to "bargain basements" or warehouse outlets. At the same time. However. Your ability to anticipate customer demand for certain items will help you plan your inventory purchases so that sufficient stocks are on hand to accommodate sales volume without excesses that cause other problems. Inventory R ep l eni s h ment The key to successful inventory management is adherence to procedures for inventory replenishment. weeks'. There may be a wholesale market available for certain kinds of inventory. In this way. . it is wiser to scrap inventory that shows no sales activity for an extended period of time.Inventory Management customers.

KORIA in electronics etc. Product categories in Big Bazaar Big Bazaar generally deals in national level brands like Lee. and seeing the strategic location of Big Bazaar. Transportation is also good. by the efficient employees of big bazaar. it could have in . we can say. .. footwear . Mainly Cycle inventory is maintained for FMCG product category & Food Category.. that are :FMCG. fashion & apparels .. In order to complete the project. book zone.. Firstly it is in the heart of the city.. we went on a survey to Big Bazaar. are of different product category. home decorator .B az aar.Inventory Management Answers to questions given.FOOD junction . The inventories maintained in the outlet.. which has all types of customers coming in and their. Safety level of inventory for FMCG Products.. Levis etc.. because of fluctuation in demand. being easily converted into sale. private vehicles etc. as one can easily reach big bazaar through auto. fruits & vegetables . on the basis of our visit to B ig. which gives it another competitive advantage over its competitors. Then we asked about the product categories .. CDs etc Location of Big Bazaar Considering all the facts which we have studied. Types of inventories maintained. that the location is the best. It is near station. and for Apparel..chill section . Other than this it also deals in some Private label brands DJ&C in apparel. footfalls.. Secondly it is in a shopping mall. Staple items . Moreover it is at the place where traffic inception is always high. FOOD & NON. Seasonal inventory is maintained.

However in case. For every sample of clothes they have a back up of 10 pieces. form local vendors. if more number of pieces are required. Reorder points of inventories The manager in charge told us that there is no such reorder points. He also told that recently big bazaar has undergone tremendous technological advancement. like Pantaloons. instead of losing them. Orders are placed as and when required. but if. In this they prefer sending the customers to pantaloons. automatically. the store manager inspects the stocks time to time and also the demands of customers. they first ask other big bazaar location such as that of Patia etc. they go for “Transfer of Interest”. so that he can decide the level of inventory. For general merchandise. food and non-food items. it was 7 days. Supply chain of perishable and imperishable goods . even then they fail to meet the demands of customers.Inventory Management Decision of how inventories are maintained Then coming to how the store manager decides the level of inventory. as its supply chain has become completely computerized. Manager maintains the Stock – in & Stock – out. which includes. except in a few items. However they always keep in mind the transit time of 2 days. He. as for eg. he told that apparels are ordered approximately after 45 days. Vegetables are taken on a daily basis. to other outlets of future group. as it is also of Future Group. the computer sends the request for back up. Once the product is sold. also has seen the trends in the requirement of inventories. Uncertain demands of customers As discussed earlier. Previously apparels were ordered once there stock fell below 4 per item piece. However he told that there are no such measures. the uncertain demands are met by either by getting it through other outlets of big bazaar or through transfer of interest.

Discount offers are basically given by manufacturers to them. it has to take proper care of machines.. However after convincing him a lot. electronic equipments near the gates. . on cash counters etc.. Whereas imperishable goods like utensils and staple goods and electronic items are brought from .. to check thieves. The transportation is outsourced. Area of Maintenance Since the store is fully computerized. inventory management. He told us that mostly they give discount offers. but in case of emergency. The modes of transportation which are used in supply chain process are Truck & Rails. The distribution channel used in supply chain process is operated by Central Distribution Channel.Inventory Management Perishable goods like vegetables are maintained with great care.. Mainly the carriers for Big Bazaar are Quick & Safe. Vegetables are bought on daily basis on the basis of demand. and after keeping a safe margin of profit. in the sense.. and TNT. the manager was not willing to answer us. Electrical wirings have to be closely monitored. Deluxe Roadways. near corners of turning.. which is located in …….. Inventory room has to be checked regularly for any sort of leakages. Airconditioners have to be regularly checked. They keep thing in places where they see for longer duration. then also strategies keep changing. Gati. like billing.. From there goods are supplied to every Big Bazaar Store. Operational strategies followed by retail outlet to attract more customers When we raised the question of strategy for attracting customers. they release the items on discounts. Food items are to be regularly checked.. flights are also being used.. go for promotional activities and put banners on road sides.. They also give ads in television. and seasonal item. for eg.. It is also ascertained that damaged vegetables are sold at a low cost to some other channels. Short circuit cameras have to be checked regularly as it is a major factor in security arrangement.. However once the customers is inside the store. he gave us some generalized strategies..

are kept on proper shelves. The Questionnaire that we have prepared is as follows:- P. both in inventory and at store. milk. milk products. Food items which are required to be kept at cold places. are kept in refrigerators. like cold-drinks. fruits. .O. whereas those which can be kept anyway. cheese.Inventory Management Quality of Food-items Food items are kept in a separate place. etc.T.

Are you satisfied with the quality of products you buy from Big. How satisfied are you with the speed in which the service/product was delivered? 1 2 3 4 5 3.Bazaar? 1 2 3 4 5 7. where 1 = "Never". How satisfied are you with the ease of contacting the person you needed? 1 2 3 4 5 4. How satisfied are you with the total management of the store? 1 2 3 4 5 . How satisfied are you with the clarity of information or advice provided? 1 2 3 4 5 5. 5 = "Always" 1. How satisfied are you with the time taken to respond to your queries? 1 2 3 4 5 6. 3 = “Can’t say”. 2 = “Seldom”. How satisfied are you overall with the service you received? 1 2 3 4 5 2. 4 = “Often”. Are you satisfied with the cleanliness of the store? 1 2 3 4 5 8.Inventory Management Q u e s t io n n a ir e Please put (tick) on a scale of 1-5.

Bar-graph.SPSS . Meth od ol ogy: Sampling technique used.Mean. Standard Deviation.Convenient Sampling Sample size.Inventory Management The responses were collected from 10 people. Line-graph Software.10 Statistical method used. who have been to Big Bazaar.

00 5.00 2.00 3.00 2.00 3.1000 4.00 5.00 Mean 4.00 47.00 40.00 5.73786 .1000 3.7000 Std.00 3.00 2.00 2.2 4.6 4.2000 4.87560 .1000 4.00 Minimum 3.81650 .00 38.00 5.00 41.8 Mean 3.48305 Bar-Graph 4.00 3.03280 .00 1.00 4.00 5. Deviation .0 3.4 4.6 VAR00001 VAR00003 VAR00005 VAR00007 VAR00008 VAR00002 VAR00004 VAR00006 .00 41.00 41.0000 4.00 2.00 Sum 41.8 4.00 3.00 5.00 42.1000 4.00 2.73786 .10050 1.00 5.Inventory Management F i nd i ngs : Descriptive Statistics N VAR00001 VAR00002 VAR00003 VAR00004 VAR00005 VAR00006 VAR00007 VAR00008 Valid N (list wise) 10 10 10 10 10 10 10 10 10 Range 2.00 Maximum 5.8000 4.63246 1.00 3.

5 .8 .4 VAR00001 Standard Deviation VAR00003 VAR00005 VAR00007 VAR00008 VAR00002 VAR00004 VAR00006 .0 .Inventory Management Line-Graph 1.6 .9 .2 1.7 .1 1.

.Inventory Management A nal ys i s Here the 8 variables stand for the 8 questions asked to the respondents. where as it is the lowest for question number 8. They think that it is due to the low price of the products available there. However. question number 8 has a unanimous response. the response of question number 5 differs in opinion among customers. we can infer that the customers are not happy with the quality of the products the buy from the store. and so it has the lowest deviation from the standards. It signifies that. which means that the customers are “Often” satisfied with the services they receive at the store. The same is shown in the bar graph. As the mean of question number 8 is highest we can infer that the customers are happy with the way the store is managed. Some are satisfied with the time taken to respond to there queries. we can see that overall the mean is above 4. After calculating the mean. But when we look at the standard deviation of the data. we see that the standard deviation of the responses is highest for question number 5. However since the mean of question number 6 is lowest. It is everyone’s opinion that the management of Big-Bazaar has to be given all kudos for efficient functioning and customer satisfaction. whereas some are not.

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